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Abstract

This study seeks to determine how both the Social Security Disability Benefits and the Nutritional Assistance Program (NAP) have affected the labor supply of farm laborers and the coffee pickers, and to estimate a production function for the coffee producing sector of Puerto Rico between the years of 2002 and 2012. Data from 29 municipalities with coffee farms were used in this study. Two production functions were estimated using the Heckman Selection Model. The first one included the farm laborers and the second one the coffee pickers. It was concluded that direct federal transfers have a larger negative effect in the farm labor group than it did among the coffee pickers. It was also found that environmental factors had the biggest impact on coffee production, followed by the amount of acreage of land, and labor.